Canada’s residential real estate market showed strong year-over-year price increases in the first quarter of 2016, according to the Royal LePage House Price Survey.
The Greater Vancouver and Greater Toronto Area (GTA) real estate markets continue to lead the country in home price appreciation, with Canada’s economic landscape supporting robust housing demand in these metropolitan areas. Additionally, an emerging trend of inter-provincial migration to British Columbia and Ontario from commodity-focused economic regions such as Alberta is expected to put further upward pressure on home prices in these areas in the coming months.
Meanwhile in Quebec, the residential real estate market in the Greater Montreal Area is showing the most promising signs of renewal seen in recent years, posting home price increases and a noticeable surge in unit sales in the first quarter.
The report, based on proprietary property value data in 53 of the nation’s largest real estate markets, shows that the price of a home in Canada increased 7.9% year-over-year to $512,621 in the first quarter of 2016. The price of a two-storey home rose 9.2% year-over-year to $629,177, and the price of a bungalow increased 6.8% to $426,216. During the same period, the price of a condominium increased 4.0% to $344,491.
In Alberta, year-over-year home price declines have trailed the drops in sales volumes that began in 2015, but are now starting to emerge in varying degrees across the province. Calgary, with its large population of oil company head-office professionals and less affordable housing, is expected to see more of a price adjustment during the year than will be seen in Edmonton, where prices remain relatively flat. In contrast, the GTA and Greater Vancouver markets are skewed in favour of the seller, with a shortage of inventory and growing demand putting upward pressure on prices.
The survey also showed a noticeable divergence between Canada’s two hottest markets: while the GTA sustained its trajectory of an aggregate year-over-year home price increase in the 8% range (8.4%), the Greater Vancouver market accelerated at rarely seen appreciation levels, surpassing a 20% (21.6%) aggregate year-over-year home price increase for the region.
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During the first quarter, the Greater Montreal Area real estate market saw signs of renewal, including a dramatic increase in home sales activity, which rose 9.4% year-over-year. In the luxury segment, when looking at condominiums in the $500,000 to $1-million range on the island of Montreal, the year-over-year increase in sales volume jumped to 23% for the quarter and for homes over $1-million, sales volume increased 14% year-over-year. With adequate supply to meet this increased demand, home prices showed moderate growth, posting a 1.8% year-over-year aggregate price increase in the region.
In addition to low interest rates, the low dollar, and an expanding U.S. economy, in the coming year, Montreal’s housing market is expected to gain traction as a result of strong export performance driven by a steady recovery in the manufacturing and services sectors. Large infrastructure projects such as work on the Champlain Bridge and on the Turcot Interchange are also expected to contribute to local employment, with the Conference Board of Canada projecting that these two projects alone will reverse three years of decline in Montreal’s construction sector.
Outside of British Columbia and Ontario, year-over-year changes in house prices were generally modest in the first quarter. In Atlantic Canada, Moncton saw the largest gains, posting an aggregate home price increase of 3.4%, while the remainder of the Atlantic regions surveyed saw slight to moderate declines. In other parts of Western Canada, Winnipeg home prices increased 3.8% year-over-year, while Regina and Saskatoon, feeling some of the impact of declines in commodity prices and net-migration, saw slight decreases of 1.1% and 0.3%, respectively.